Here's what could happen to America's hundreds of dead malls

Fireworks for the opening weekend of the Bon Marche at Northgate Mall in Seattle, Washington, on April 30, 1950. Macy's is now where the Bon Marche was. seattlepi.com

As one of the first postwar suburban shopping centers in the US, the Northgate Mall in northern Seattle defines classic mall architecture.

Its architect, John Graham Jr., pioneered the dumbbell, big-box shape for malls, in which two rows of stores face each other and a department store anchors each end. Graham also gave Northgate a grocery store — which later became a food court — and a huge parking lot. In the decades that followed, malls around the country copied Northgate's layout. It became the model for most American malls through the late 20th century.

This design may not be working as well in the 21st century, however. Hundreds of malls and thousands of mall-based stores have shuttered in the past two decades, and many more may close in coming years.

More than 6,400 store locations have announced closures this year. In a recent report, analysts from Credit Suisse predicted that 20% to 25% of malls — about 220 to 275 shopping centers — would shutter over the next five years, largely because of store closures.

Traditional malls need to transform themselves to stay alive, and many, including Northgate, are making changes to attract more business.

Developers are now turning many of Northgate's parking spaces into a light-rail station to connect the neighborhood to downtown Seattle. Other parts of the lot have been turned into energy-efficient apartments, senior housing, a medical center, more retail space, and a bioswale that keeps runoff from the nearby creek away.

Malls of the future have an opportunity to fulfill other community needs besides commerce, June Williamson, an architecture professor at the City College of New York and an author of "Retrofitting Suburbia," told Business Insider.

Here is what may become of the many failing malls of today:

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Before: The department store

A Sears store inside the Woodbridge Center Mall in Woodbridge, New Jersey.
Business Insider/Sarah Jacobs

Nearly every major department store— including Macy's, Kohl's, Walmart, and Sears — has shuttered stores in recent years to reduce losses from unprofitable locations and the rise of online shopping.

The US also just built too many malls, Williamson says. In the mid-1990s, the number of American malls peaked at about 1,500. Today, about 1,000 are left.

Building more new malls means department stores, which often pay a large part of the lease, could move out, making it harder for the mall to survive.

"The development climate of malls were driven less by demand and more by opportunity," Williamson said. "As new centers get built, anchor stores are lured away, and a cannibalization process begins. ... Only so many consumers are going to malls, and they will flock to newer ones. If developers build a new mall, they are inevitably undercutting another property. So older properties have to get repositioned every decade, or they will die."

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After: Fitness centers, churches, medical clinics, and data centers

Closed department stores will most likely become other businesses that could benefit from the large square footage, such as fitness centers, churches, offices, public libraries, and even medical clinics, Williamson says.

The number of walk-in clinics in malls rose by 15% from 2011 to 2016, and a third of all urgent cares are now inside shopping centers, according to the Urgent Care Association of America.

In 2007, the 100 Oaks Mall redeveloped one of its department stores into the Vanderbilt University Medical Center, which leased over half of 850,000-square-foot building. (The other half is still retail space.)

In late 2016, the Milpitas Planning Commission in California also approved a plan to turn the abandoned department store in the Milpitas Town Center into a 24-hour gym.

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Before: The food court

Reuters

Retail stores are not the only mall businesses that are struggling — those in the food court are having a hard time, too.

In 2014, Sbarro, the Italian chain that was a food-court staple, filed for bankruptcy protection and closed 155 of its 400 North American locations, most of which were in malls.

The New York Times reported at the time: "The company is in financial trouble because one of its big bets on real estate — that Americans will keep going to mall food courts en masse — has turned out to be wrong."

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After: Art galleries and community gathering spaces

A rendering of the redeveloped food court at Burbank Town Center in California.
Burbank Town Center

Since most food courts have a lot of natural light, they could be used as gathering spaces for community groups or daycare centers if they closed down, Williamson says.

Some food courts, however, are redeveloping into clusters of higher-priced restaurants. Miami's Aventura Mall closed its food court to develop more restaurants and shops, which are expected to open this fall.

Before: The atrium

When a mall doesn't draw a ton of shoppers, the atrium becomes an underutilized space — and the owner is still paying the lease.

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After: Car showrooms and event spaces

The Fashion Show Mall in Las Vegas, Nevada.
Fashion Show Mall

Mall atriums are wide open spaces that can allow for events like concerts or fashion shows, or serve as car showrooms — all of which generate revenue, Williamson says.

In 2000, the atrium at Penn-Can Mall in Syracuse, New York, turned into a car dealership called Driver's Village. Today, the only retail spaces in the mall are a café, a space for children's parties, an auto-accessory store, and insurance companies.

Toronto's largely abandoned Galleria Mall has come up with another clever use for its atrium: hosting dance parties. Vice reports that the mall periodically turns itself into a club called Shoppers Dance Mart.

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Before: Shops

Reuters/Suzanne Plunkett

In the 1990s, the average American shopper would spend hours in a mall, but now people barely stay for an hour, David Smiley, the assistant director of Columbia University's urban-design graduate program, told Business Insider.

When so-called anchor stores pull out of a mall, the leases for the other smaller stores often become too high, so they relocate or close.

Many dead retail spaces, Williamson says, will most likely morph into businesses that have community functions, such as apartments, public libraries, indoor farms, and refrigerated spaces for processing food for local restaurants or grocery stores.

"You'll find DMVs, town halls, and libraries in malls increasingly — the type of place where the public government can interact with the public," Williamson said.

Some public spaces like libraries don't bring in much in rent, so they mainly serve as a way to attract people to the mall, she says.

"If the mall owners can't keep the place fully leased, this at least keeps people coming who could keep the other lessees from fleeing," she said. "The Main Street was killed by the mall, so developers are trying to build new downtowns inside the malls."

In St. Louis, one large store in the Chesterfield Mall became the Children's Illustrated Art Museum and a puppet theater, while another in the CoolSprings Galleria in Franklin, Tennessee, turned into a gallery that showcases local artists.

The three-story Providence Arcade in Rhode Island — America's oldest mall — transformed most of its shops into 48 micro-apartments in 2016, with a hair salon and cafés still on the ground floor. Similarly, New York's White Plains Mall may be torn down and redeveloped into a 20-story residential tower within the next five years.

Smiley says that if a mall is being redeveloped into housing, most of the building usually will be demolished. Most malls have little plumbing and electrical capacity, which residential buildings demand.

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Before: The parking lot

Huge amounts of surface-level parking can cost malls money and space that they could use for other businesses that bring in revenue, according to the Urban Land Institute. Large lots are also more susceptible to flooding.

Surface-level parking in the US can cost from $670 to $3,300 annually per space, depending on the location and land costs — in suburban areas, the average is about $900 — according to a recent report by the Victoria Transport Policy Institute.

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After: Housing, farmers markets, walking paths, and plazas

A rendering of a proposal for Belvedere Crossing, a mall in West Palm Beach, Florida.
June Williamson with Anne Vaterlaus

Malls may increasingly turn their surface parking lots into space that emphasizes walking rather than driving. In some ways, this would be a nod to the original intended use of a mall, Smiley says. Until the 1960s, shopping centers had green plazas called "malls," which became a term for the enclosed center itself.

"The genealogy of the word 'mall' is a landscape term — a pedestrian space," Williamson said. "But we've co-opted that term and linked it to retail."

Williamson predicts that in the coming years, many malls will downsize their amount of surface parking and turn it into public spaces that could benefit communities.

Everett Mall in Washington, for example, hosts a weekly farmers market in its parking lot. And in Seattle, Northgate devoted its two southern parking quadrants to a condo building for residents 55 and up. The Smith Haven Mall in Lake Grove, New York, holds a summer concert series in its parking lot every year.

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Other malls are transforming into what Williamson calls "ethnic malls."

Williamson describes ethnic malls as shopping centers that target a specific ethnic demographic in a community. She says this type of customized mall can thrive more than a traditional mall because it better meets local shoppers' needs.

In Fort Worth, Texas, in the mid-2000s, Seminary South Shopping Center turned into La Gran Plaza, a mall aimed at the city's Hispanic community. Instead of a food court with mega-chains like McDonald's and KFC, it now features local purveyors that serve Latin food.

Some stores were broken up into smaller retail spaces, where people can send money abroad, make travel arrangements, and find Spanish-speaking lawyers. One of the department stores also turned into a dance hall, where teen girls can throw quinceañeras.

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Another common mall evolution is into a "destination mall."

The Wonderworks obstacle course at Destiny USA in Syracuse, New York.
Wonderworks

Unlike small suburban centers aimed at shoppers who live nearby, destination malls look to attract shoppers from the entire region.

"The emergence of entertainment as part of the shopping mall is becoming very important," Smiley said. "It keeps people in the center longer. And even if they weren't going to shop for something, they get lured in."

In 2012 and 2013, the Carousel Center in Syracuse, New York, rebranded as Destiny USA and added higher-end restaurants, IMAX screens, an arcade, and indoor go-carting and obstacle courses. The mall said it expected 29 million visits to the 2.4 million-square-foot complex in 2015.

Developers in New Jersey are also building a mega-mall called American Dream Meadowlands that will include a Nickelodeon theme park similar to the one at Minnesota's Mall of America. It's expected to open in 2018.

"People will drive miles to these malls because they will be destinations," Williamson said.